Last year a local construction company had operating revenues of $1,240,000, operating costs of $520,000 and a CCA of $98,000 based upon existing assets. The beginning of that same year the company bought essential new equipment for $130,000. This equipment has a CCA rate of 30%. The company has borrowed money and is paying $18,000 per year in interest. Interest paid on borrowed money is tax deductible, so it reduces the taxable income. The tax rate is 37.62%.
After tax cash flow is close to
$501,220
$493,340
$507,450
$500,110